Gawar Foundation, Haryana V. CIT(E), Chandigarh

ITA 3474/DEL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3328 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-05-2017
• Assessment Year: misc
• Appeal Filed On: 29-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K JAIN; VINOD GARG S
• Keywords: Charitable institution
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3474/DEL/2015 A.Y. : ------- GAWAR FOUNDATION THROUGH : S.K. JAIN, ADVOCATE, 696/8, GANGA BAGH, HANSI 125033 (HARYANA) (PAN: AACTG1482C) VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CR BUILDING, 4 TH FLOOR, SECTOR-17-E, CHANDIGARH (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. S.K. JAIN & SH. VINOD GARG, ADVOCATES DEPARTMENT BY : SH. N.K. BANSAL, SR. DR ORDER PER H.S. SIDHU, JM THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 07/5/2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(EXEMPTIONS), CHANDIGARH. 2. THE GROUNDS RAISED IN ITA NO. 3474/DEL/2015 READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND UNDER LAW ACTION OF LD. CIT(E) IN REFUSING APPROVAL OF EXEMPTION UNDER S. 80G(5)(VI) OF INCOME TAX ACT, 19 61 IS 2 ARBITRARY, ERRONEOUS, UNWARRANTED AND ILLEGAL AND M UST BE QUASHED WITH DIRECTION FOR RELIEF. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LD. CIT(E) FELL IN ERROR IN REJECTING CLA IM OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT ON INVALID FOOT INGS AND ERRONEOUS CONSIDERATIONS AS REASONS POINTED OUT FOR REJECTION ARE NOT VALID AND AS SUCH LEGALLY THE IMPUGNED ORD ER DESERVES TO BE SET ASIDE. 3. THAT LD. CIT(A) IS NOT JUSTIFIED IN REJECTING TH E APPLICATION OF APPELLANT TRUST FOR GRANTING APPROVAL OF EXEMPTION UNDER SECTION 80G(5)(VI) OF THE ACT AS THE APPELLANT TRUS T FULFILLS ALL THE NECESSARY CONDITIONS FOR APPROVAL OF EXEMPTION AS LAID DOWN IN SECTION 80G(5)(I), (II), (III), (IV) AND (V ) OF THE ACT. THE APPLICATION HAS BEEN REJECTED ONLY ON SURMISES AND CONJECTURES AND ON WHIMSICAL GROUNDS AND IRRELEVANT CONSIDERATIONS. 4. THAT LD. CIT(E) HAS NOT SPECIFIED IN IMPUGNED OR DER DATED 7.5.2015, CONDITION OF S. 80G(5) OF THE ACT BEING N OT SATISFIED LEADING TO WITHHOLDING OF APPROVAL UNDER SECTION 8 0G(5)(VI) OF THE ACT AND AS SUCH ORDER IS LIABLE TO BE SET AS IDE. 5. THAT LD. CIT(E) ERRED IN REJECTING APPLICATION F OR GRANT OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT BECAUS E APPELLANT TRUST APPLIED INCOME FOR GIVING DONATION TO ANOTHER ESTABLISHED CHARITABLE ORGANIZATION, THE FINDING IS AGAINST LAW RECOGNIZED BY VARIOUS HONBLE HIGH COURTS AND AS SU CH ORDER IS LIABLE TO BE SET ASIDE. THAT APPELLANT ASSESSEE CRAVES LEAVE TO ADD INTO AND / OR ALTER, AMEND, SUBSTITUTE, MODIFY OR WITHDRAW ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE FACTS IN BRIEF ARE THAT AN APPLICATION FOR GRANT OF APPROVAL U/S. 80G IN FORM NO. 10C WAS FILED BY THE APPLICANT ON 14.11 .2014 BEFORE THE LD. CIT(E), HISAR, WHICH WAS LATER TRANSFERRED DUE TO CHANGE OF JURISDICTION TO THE LD. CIT(E), CHANDIGARH. THE APPLICANT TRUST WAS CREATED ON 27.8.2014 AND THE SAME WAS REGISTERED WITH SUB REGISTRAR, HIS AR ON 27.8.2014. A PERUSAL OF THE TRUST DEED OF THE APPLICANT SHOWS T HAT IN CLAUSE 17 OF THE TRUST DEED, IT HAS BEEN STATED THAT ALL FUNDS, SURP LUS AND INCOME OF THIS 3 TRUST SHALL BE KEPT IN BANKS AND THE BANK ACCOUNTS OF THIS TRUST. WHEREAS THERE IS NO SUCH CLAUSE IN THE TRUST DEED THAT THE APPLICANT TRUST SHALL INVEST IN THE MODES SPECIFIED IN SUB-SECTION 5 OF S ECTION 11 OF THE INCOME TAX ACT. AS PER PROVISIONS OF SECTION 11(2) OF THE INCOME TAX ACT, THE APPLICANT WAS REQUIRED TO INVEST OR DEPOSIT ANY MON EY OR SUM ACCUMULATED OR SET APART IN THE SPECIFIED MODES AS PROVIDED UNDER SUB- SECTION (5) OF SECTION 11 OF THE INCOME TA ACT. BE FORE THE LD. CIT(E) THE APPLICANT TRUST HAS SUBMITTED THAT IN CLAUSE 24 OF THE TRUST DEED THE TRUSTEES UNANIMOUSLY SHALL HAVE THE POWER TO DISSOL VE THE TRUST IN CASE IF IT IS SO DEEMED EXPEDIENT AND NECESSARY AND IN SUCH EVENTUALITY, THE ASSETS REMAINING ON THE DATE OF DISSOLUTION OF THIS TRUST SHALL UNDER NO CIRCUMSTANCES BE DISTRIBUTED AMONG THE TRUSTEES, BU T THE SAME SHALL BE TRANSFERRED TO ANOTHER PUBLIC CHARITABLE ORGANIZATI ON WHETHER REGISTERED OR UNREGISTERED. THERE IS NO SUCH CLAUSE IN THE TR UST DEED THAT THE ASSETS AND PROPERTIES OF THE TRUST SHALL BE CONSIDERED FOR TRANSFER TO ANY OTHER SOCIETY / TRUST WITH IDENTICAL AIMS AND OBJECTS. T HE LD. CIT(E) OBSERVED THAT ON PERUSAL OF THE INCOME & EXPENDITURE ACCOUNT OF THE APPLICANT TRUST SHOWS THAT THE MAIN EXPENDITURE WAS INCURRED BY THE APPLICANT BY WAY OF DONATION TO ANOTHER TRUST NAMELY SHRI KRISHA N PARNAMI MANAV SEWA TRUST, HISAR, HOWEVER, THE APPLICANT TRUST HIM SELF HAS NOT MADE ANY SUCH EXPENDITURE FOR A CHARTIABLE PURPOSE, WHICH IS COVERED U/S. 2(15) OF THE INCOME TAX ACT, THEREFORE, THE APPLICANT WAS NO T QUALIFIED FOR GRANT OF APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT , HENCE, THE 4 APPLICATION FOR GRANT OF APPROVAL U/S. 80G WAS REJE CTED BY THE LD. CIT(E) VIDE HIS ORDER DATED 7.5.2015. 4. AGGRIEVED WITH THE IMPUGNED ORDER DATED 7.5.201 5 PASSED BY THE LD. CIT(E), ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 5. IN SUPPORT OF HIS CONTENTION, LD. A.R. OF THE A SSESSEE HAS FILED A PAPER BOOK CONTAINING PAGES 1 TO 69 HAVING THE COPY OF FORM NO. 10G DATED 14.11.2014 SUBMITTED IN O/O CIT, HISAR, REGD. TRUST DEED NO. 6349 DATED 29.8.2014, NOTES ON ACTIVITIES, INCOME A ND EXPENDITURE ACCOUNT FROM 27.8.2014 TO 14.11.2014 AND BALANCE SH EET AS ON 14.11.2014; PROVISIONAL INCOME AND EXPENDITURE ACCO UNT FROM 27.8.2014 TO 31.3.2015 AND BALANCE SHEET AS ON 31.3.2015; REG ISTRATION CERTIFICATE UNDER SECTION 34(3) OF JUVENILE JUSTICE (CARE & PRO TECTION OF CHILDREN) ACT, 2000 IN THE NAME OF SHRI KRISHAN PRANAMI BAL S EWA ASHRAM, HISAR; THANKS LETTER DATED 11.11.2014; PARTYWISE DETAILS O F EXPENDITURE DURING 27.8.2014 TO 31.3.2015; BANK ACCOUNT NO. OF ASSESSE E WITH OBC, HISAR FROM 22.10.2014 TO 6.4.2015; LETTER OF ITO(E), ROHT AK DATED 16.4.2015; LETTER TO ITO(E), ROHTAK DATED 22.4.2015; LETTER OF CIT(E), CHANDIGARH DATED 12.3.2015; LETTER TO CIT(E), CHANDIGARH DATED 2.4.2015; DETAILS OF VOLUNTARY CONTRIBUTIONS RECEIVED BY ASSESSEE RS. 3 7 LACS; CONFORMATION OF GAWAR CONSTRUCTION LTD., GURGAON REGARDING DONATION OF RS. 37 LACS DURING 22.10.2014 TO 31.3.2015; DETAILS OF INTER TR UST DONATIONS MADE IN KIND TO SH. KRISHAN PRANAMI BAL SEWA ASHRAM, HISAR AT RS. 32,79,951/- AS PER INCOME AND EXPENDITURE ACCOUNT; ITR-7 OF ASS ESSMENT YEAR 2015- 5 16; ACK. DATED 31.8.2015 OF AY 2015-16; ITR-7 OF AY 2016-17 AND ACK. NO DATED 2.8.2016 OF AY 2016-17. LD. A.R. OF THE AS SESSEE REITERATED THE CONTENTS OF THE GROUNDS OF APPEAL BY STATING THAT R EJECTION OF CLAIM OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT IS ON INVALID FOOTINGS AND ERRONEOUS CONSIDERATION AS REASONS POINTED OUT FOR REJECTION ARE NOT VALID; THE APPLICATION OF THE ASSESSEE WAS REJECTED ONLY O N SURMISES AND CONJECTURES AND ON WHIMSICAL GROUNDS AND IRRELEVANT CONSIDERATION. HE FURTHER STATED THAT REJECTION OF APPLICATION FOR GR ANT OF APPROVAL U/S. 80G(5)(VI) IS ARBITRARY, BECAUSE THE APPELLANT TRUS T APPLIED INCOME FOR GIVING DONATION TO ANOTHER ESTABLISHED CHARITABLE O RGANIZATION. IN VIEW OF THE ABOVE, THE LD. COUNSEL OF THE ASSESSEE REQUESTE D THAT THE IMPUGNED ORDER MAY BE SET ASIDE AND APPEAL OF THE ASSESSEE M AY BE ALLOWED. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS P ASSED BY THE LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE PAPER BOOK FILED BY THE LD. AR OF THE ASSESSEE, WE FIND THE APPLICANT FILED AN APPLICATION ON 14.11.2014 FOR GRANT OF APPROVAL U/S. 80G IN FORM N O. 10C BEFORE THE LD. CIT(E), HISAR, WHICH WAS LATER TRANSFERRED DUE TO CHANGE OF JURISDICTION TO THE LD. CIT(E), CHANDIGARH. THE APPLICANT TRUST WAS CREATED ON 27.8.2014 AND THE SAME WAS REGISTERED WITH SUB REGISTRAR, HIS AR ON 27.8.2014. LD. CIT(A) OBSERVED THAT A PERUSAL OF THE TRUST DEED OF THE APPLICANT SHOWS THAT IN CLAUSE 17 OF THE TRUST DEED, IT HAS BEEN ST ATED THAT ALL FUNDS, 6 SURPLUS AND INCOME OF THIS TRUST SHALL BE KEPT IN B ANKS AND THE BANK ACCOUNTS OF THIS TRUST. WHEREAS THERE IS NO SUCH CL AUSE IN THE TRUST DEED THAT THE APPLICANT TRUST SHALL INVEST IN THE MODES SPECIFIED IN SUB-SECTION 5 OF SECTION 11 OF THE INCOME TAX ACT. AS PER PROVI SIONS OF SECTION 11(2) OF THE INCOME TAX ACT, THE APPLICANT WAS REQUIRED T O INVEST OR DEPOSIT ANY MONEY OR SUM ACCUMULATED OR SET APART IN THE SPECIF IED MODES AS PROVIDED UNDER SUB-SECTION (5) OF SECTION 11 OF THE INCOME TA ACT. WE FURTHER NOTE THAT BEFORE THE LD. CIT(E) THE APPLICA NT TRUST HAS SUBMITTED THAT IN CLAUSE 24 OF THE TRUST DEED THE TRUSTEES UN ANIMOUSLY SHALL HAVE THE POWER TO DISSOLVE THE TRUST IN CASE IF IT IS SO DEEMED EXPEDIENT AND NECESSARY AND IN SUCH EVENTUALITY, THE ASSETS REMAI NING ON THE DATE OF DISSOLUTION OF THIS TRUST SHALL UNDER NO CIRCUMSTAN CES BE DISTRIBUTED AMONG THE TRUSTEES, BUT THE SAME SHALL BE TRANSFERR ED TO ANOTHER PUBLIC CHARITABLE ORGANIZATION WHETHER REGISTERED OR UNREG ISTERED. THERE IS NO SUCH CLAUSE IN THE TRUST DEED THAT THE ASSETS AND P ROPERTIES OF THE TRUST SHALL BE CONSIDERED FOR TRANSFER TO ANY OTHER SOCIE TY / TRUST WITH IDENTICAL AIMS AND OBJECTS. THE LD. CIT(E) OBSERVED THAT ON P ERUSAL OF THE INCOME & EXPENDITURE ACCOUNT OF THE APPLICANT TRUST SHOWS THAT THE MAIN EXPENDITURE WAS INCURRED BY THE APPLICANT BY WAY OF DONATION TO ANOTHER TRUST NAMELY SHRI KRISHAN PARNAMI MANAV SEWA TRUST, HISAR, HOWEVER, THE APPLICANT TRUST HIMSELF HAS NOT MADE ANY SUCH E XPENDITURE FOR A CHARITABLE PURPOSE, WHICH IS COVERED U/S. 2(15) OF THE INCOME TAX ACT. WE ALSO NOTE SINCE THE APPLICANT WAS NOT QUALIFIED FOR EXEMPTION U/S. 12AA OF THE I.T. ACT, 1961 AND ITS APPLICATION FOR REGISTRATION U/S. 12AA 7 WAS REJECTED BY THE LD. CIT(E) VIDE HIS ORDER DATE D 7.5.2015. AND AGAINST THE LD. CIT(E)S AFORESAID ORDER, THE ASSES SEE APPEALED BEFORE THE TRIBUNAL AND THE TRIBUNAL WHILE DEALING WITH THE IT A NO. 3477/DEL/2015 IN ASSESSEES OWN CASE HAS SET ASIDE THE ISSUE IN DIS PUTE TO THE FILE OF THE LD. CIT(E) TO DECIDE THE ISSUE AFRESH AND AT PRESEN T THE ASSESSEE HAS NOT BEEN EXEMPTED U/S. 12AA OF THE I.T. ACT, THEREFORE , THE APPLICANT WAS NOT QUALIFIED FOR GRANT OF APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT, HENCE, THE APPLICATION FOR GRANT OF APPROVAL U/S. 80G WAS RIGHTLY REJECTED BY THE LD. CIT(E) VIDE HIS ORDER DATED 7.5 .2015, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UP HOLD THE ORDER OF THE LD. CIT(E) AND ACCORDINGLY DISMISS THE ASSESSEES A PPEAL. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/05/2017. SD/- SD/- (PRASHANT MAHARISHI) [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 09/05/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES